Correlation Between Alliance Financial and Mycron Steel
Can any of the company-specific risk be diversified away by investing in both Alliance Financial and Mycron Steel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alliance Financial and Mycron Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Financial Group and Mycron Steel Bhd, you can compare the effects of market volatilities on Alliance Financial and Mycron Steel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alliance Financial with a short position of Mycron Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Financial and Mycron Steel.
Diversification Opportunities for Alliance Financial and Mycron Steel
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alliance and Mycron is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Financial Group and Mycron Steel Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mycron Steel Bhd and Alliance Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alliance Financial Group are associated (or correlated) with Mycron Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mycron Steel Bhd has no effect on the direction of Alliance Financial i.e., Alliance Financial and Mycron Steel go up and down completely randomly.
Pair Corralation between Alliance Financial and Mycron Steel
Assuming the 90 days trading horizon Alliance Financial Group is expected to generate 0.34 times more return on investment than Mycron Steel. However, Alliance Financial Group is 2.93 times less risky than Mycron Steel. It trades about 0.08 of its potential returns per unit of risk. Mycron Steel Bhd is currently generating about 0.01 per unit of risk. If you would invest 331.00 in Alliance Financial Group on August 26, 2024 and sell it today you would earn a total of 168.00 from holding Alliance Financial Group or generate 50.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliance Financial Group vs. Mycron Steel Bhd
Performance |
| Timeline |
| Alliance Financial |
| Mycron Steel Bhd |
Alliance Financial and Mycron Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Financial and Mycron Steel
The main advantage of trading using opposite Alliance Financial and Mycron Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Financial position performs unexpectedly, Mycron Steel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mycron Steel will offset losses from the drop in Mycron Steel's long position.| Alliance Financial vs. Digistar Bhd | Alliance Financial vs. Minetech Resources Bhd | Alliance Financial vs. OpenSys M Bhd | Alliance Financial vs. Insas Bhd |
| Mycron Steel vs. Press Metal Bhd | Mycron Steel vs. Southern Steel Bhd | Mycron Steel vs. Eonmetall Group Bhd |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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